Triumph Group Inc. designs engineers manufactures repairs and overhauls aircraft components. The company serves a broad worldwide spectrum of the aviation industry including commercial airlines and air cargo carriersas well as original equipment manufacturers of aircraft and aircraft components. The company also distributes processes and fabricates metal products. Triumph Group Inc. has a market cap of $669.3 million; its shares were traded at around $40.15 with a P/E ratio of 6.8 and P/S ratio of 0.5. The dividend yield of Triumph Group Inc. stocks is 0.4%. Triumph Group Inc. had an annual average earning growth of 2.2% over the past 10 years.
Highlight of Business Operations:Net sales decreased by $4.4 million, or 1.4%, to $316.1 million for the quarter ended June 30, 2009 from $320.5 million for the quarter ended June 30, 2008. The acquisitions of Merritt Tool Company, Inc. (now Triumph Structures East Texas), Saygrove Defence & Aerospace Group Limited (now Triumph Actuation & Motion Control Systems-UK), the aviation segment of Kongsberg Automotive Holdings ASA (now Triumph Controls-U.K and Triumph Controls-Germany) and The Mexmil Company, LLC (now Triumph Insulation Systems), collectively the fiscal 2009 acquisitions, contributed $26.0 million of the net sales increase. Excluding the effects of the fiscal 2009 acquisitions, organic sales declined $30.4 million, or 9.5%, primarily as a result of the reduction in demand for business jets, the decline in the regional jet market due to the overall economy, major program delays (particularly in the 747-8 and 787 programs), lower passenger and freight traffic and airline inventory de-stocking.
Segment operating income decreased by $5.7 million, or 11.4%, to $44.3 million for the quarter ended June 30, 2009 from $50.0 million for the quarter ended June 30, 2008. Operating income decrease was a direct result of the decline in gross margin ($5.0 million) due to lower sales volume as described above, costs incurred in the start up of our Mexican facility ($0.7 million) and increases in depreciation and amortization ($1.9 million) due to the fiscal 2009 acquisitions, partially offset by the decreases in incentive compensation ($1.0 million) and legal fees ($0.9 million).
Loss from discontinued operations before income taxes was $5.4 million for the quarter ended June 30, 2009, which includes an impairment charge of $2.5 million, compared with a loss from discontinued operations before income taxes of $1.9 million, for the quarter ended June 30, 2008. The benefit for income taxes was $1.9 million for the quarter ended June 30, 2009 compared to a benefit of $0.6 million in the prior year period.
Aerospace Systems: The Aerospace Systems segment net sales increased by $1.7 million, or 0.7%, to $259.9 million for the quarter ended June 30, 2009 from $258.2 million for the quarter ended June 30, 2008. The increase was primarily due to the additional sales associated with the fiscal 2009 acquisitions of $26.0 million, offset by declines in organic sales of $24.3 million due to declines in the business jet and regional jet markets due to the overall economic conditions and major program delays (particularly in the 787 and 747-8 programs).
Aerospace Systems segment operating income decreased by $4.2 million, or 9.2%, to $41.9 million for the quarter ended June 30, 2009 from $46.1 million for the quarter ended June 30, 2008. Operating income decreased due to decreased gross margin resulting in part from lower sales volume as described above, in part from the effect of lower margins from the fiscal 2009 acquisitions (26.5%) as compared to margins from our organic sales (30.5%) and the increased depreciation and amortization expense ($2.1 million) primarily as a result of the fiscal 2009 acquisitions, all partially offset by decreases in litigation ($0.9 million) and incentive compensation ($1.2 million).
Cash flows from operations for the three months ended June 30, 2009 increased $17.6 million, or 117.8% from the three months ended June 30, 2008. Our cash flows from operations increased despite a decrease of $5.8 million in net income, which included $4.4 million in additional non-cash charges for depreciation and amortization due to the fiscal 2009 acquisitions and an impairment charge within discontinued operations during the three months ended June 30, 2009. The increase in cash flows was driven by continued improvements in cash collection efforts combined with lower sales, resulting in a $8.4 million improvement as compared to the three months ended June 30, 2008. In addition we improved our inventory management resulting in a reduction of cash usage of $15 million as compared to the prior year period.
Read the The complete ReportTGI is in the portfolios of Bruce Sherman of Private Capital Management, Arnold Schneider of Schneider Capital Management.